Regulations recently adopted by the California Energy Commission require owners of nonresidential buildings to disclose building energy performance data each time a building is sold, leased to a single tenant, or financed. Compliance with the regulations will be phased in from July 1, 2013 to July 1, 2014 based on total gross floor area as follows:
- On and after July 1, 2013, all nonresidential buildings over 50,000 square feet;
- On and after January 1, 2014, all nonresidential buildings over 10,000 square feet; and
- On and after July 1, 2014, all nonresidential buildings with at least 5,000 square feet.
How to Comply
Once a building has been phased in according to the compliance schedule, each time it is subsequently sold, leased to a single tenant, or financed, the owner must provide the prospective buyer, tenant or lender with a disclosure package generated by the U.S. Environmental Protection Agency’s (EPA) online ENERGY STAR® Portfolio Manager and complete a compliance report for the Energy Commission.
Disclosures to prospective buyers or tenants must be made at least 24 hours before the parties enter into the sales contract or lease. Disclosures to lenders must be made before or concurrently with the loan application.
In each case, the owner must start the disclosure process at least 30 days before a disclosure is required. This is done by opening (or updating) the building’s online EPA Portfolio Manager account and requesting that utility companies release energy use data for the building for at least the most recent 12 months. Utility companies must upload the building’s energy use data to the EPA Portfolio Manager within 30 days of a request. After the energy use data has been uploaded, the owner may generate and download the disclosure package consisting of:
- A standard Disclosure Summary Sheet published by the Energy Commission.
- A Statement of Energy Performance, Data Checklist, and Facility Summary generated by the EPA Portfolio Manager.
- The owner must also complete a compliance report for the Energy Commission’s use.
Once these documents are generated, they are effective for 30 days.
Officials anticipate that enforcement will be industry driven, with buyers, tenants, and lenders requesting disclosures as part of their normal due diligence. Accordingly, the regulations do not impose fines or other penalties for noncompliance; however, noncompliance potentially could be prosecuted privately by a civil action related to unfair business practices.
The energy performance disclosures are mandated by Assembly Bill 1103 (AB 1103), which was enacted in 2007 and is codified as California Public Resources Code Section 25402.10. The initial date for complying with the law had been postponed repeatedly while the Energy Commission finalized the regulations. Residential and multi-tenant buildings are currently not subject to AB 1103 or the regulations. The goal of AB 1103 is to promote energy efficiency by requiring nonresidential building owners to disclose building energy performance.